FASB issues crypto accounting rules, setting a new standard
Under the new rules, changes in fair value of certain crypto assets must be recognized in net income each reporting period.
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The Financial Accounting Standards Board (FASB), a private organization responsible for establishing financial accounting and reporting standards in the US, has released a new Accounting Standards Update (ASU) today to enhance the accounting and disclosure of specific crypto assets.
This move comes in response to stakeholders’ feedback emphasizing the need for improved accounting and disclosure of crypto assets.
Richard R. Jones, FASB Chair, emphasized the update as a response to widespread stakeholder calls for improved crypto asset accounting and disclosure practices. He highlighted that:
“It will provide investors and other capital allocators with more relevant information that better reflects the underlying economics of certain crypto assets and an entity’s financial position while reducing cost and complexity associated with applying current accounting.”
The ASU covers all assets the FASB Accounting Standards Codification defines as intangible assets, which do not grant the holder enforceable rights or claims on underlying goods, services, or other assets. These assets must originate or exist on a blockchain-based distributed ledger, be secured through cryptography, be fungible, and not be designed or issued by the reporting entity or its related parties.
These changes require entities to measure certain crypto assets at fair value each reporting period, with changes in fair value recognized in net income. It also mandates disclosures about significant crypto asset holdings, contractual sale restrictions, and changes during the reporting period. The ASU will be effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years.